Greetings, lads. Elon’s TweetThreats and PP posts aside, EV stocks are melting faces this month. Consider the following…
- Rivian IPO blew up. Share price $110. Now $98B market cap.
- Tesla +120% since May. SP $1,190. Now $1.2T MC.
- Lucid +100% in three weeks. SP $52. Now $86B MC.
Like you, SoFi didn’t fill my $RIVN IPO order. Nor did I catch the $LCID $15 dip. And sadly, I wasn’t able to get in on $TSLA at $40 two years ago.
But here’s our chance for an early entry into one of the only EV “pure plays” in the market:
Polestar — Volvo’s EV spinoff brand — estimates 2021 revenue of $1.2B and 29,000 vehicles on the road.
It’s now coming to market at a $20B valuation with $GGPI in Q1 2022.
Polestar is the only global EV ‘pure play,’ other than Tesla.
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History
A little background…
- “Polestar” takes its name from the North Star, or Polaris — not the resourceful co-ed grinding the early-evening shift at the Spearmint Rhino. That’s Polstjärnan (literal translation, “Pole Star”) if you’re Swedish.
- Polestar was started in 1996 by Volvo’s partner, Flash/Polestar Racing.
- Volvo acquired Polestar in 2015. Volvo had itself been acquired in 2010 by Geely, a China-based auto brand that sells vehicles under the brands Geely Auto, Lotus, Lynk & Co, Proton, and Volvo. Geely sold over 2.4 million cars in 2020.
- Volvo and Geely describe the Polestar brand as being “independent since 2017.”
- Polestar is co-owned by Volvo and Geely, and headquartered in Gothenburg, Sweden.
- Polestar is now being taken public at a $20B valuation by the Gores-Guggenheim, ticker GGPI.
Comps
GGPI is trading at a significant discount to TSLA and LCID, based on EV/sales multiples.
- Applying Tesla’s 2023E multiple to Polestar implies a share price of $42.51 As GGPI is currently trading at $13.72, this yields an increase of 210%.
- Applying Lucid’s 2023E multiple to Polestar implies a share price of $47.58. As GGPI is currently trading at $13.72, this yields an increase of 247%.
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Peer Multiples -- EV Pure Plays
- GGPI is essentially valued at the same forward multiples as XPEV and NIO.
- Bear in mind, XPEV and NIO are higher-risk companies that deserve valuation discounts because:
- The CCP can theoretically shut them down at any moment without warning (see: $DIDI).
- The stocks are actually ADRs and based in the Cayman Islands, so you don't even own the actual companies.
- By comparison, GGPI is headquartered in Sweden and already US-listed on the Nasdaq.
- Polestar is already an established OEM, leveraging the strategic relationship with Volvo in manufacturing, design and marketing. Hence, the investment opportunity is lower risk since Polestar is not a start-up.
- As with most present-day multinationals, there is some China-related production risk. However, Polestar is addressing the issue by opening US factories going forward.
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Gores' Deals
Gores’ track record speaks for itself…
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The EV Graveyard
The EV battlefield is littered with bodies.
But Polestar?
They've been executing all year and have already delivered 29,000 cars. How many deliveries of the first-gen Roadsters had Tesla made in 2010 when they IPO’d? Answer: 1,400.
Polestar just makes cars, baby.
CEO Thomas Ingenlath: “We have a proven track record. We actually deliver cars. We have 29,000 deliveries this year.”
Claim confirmed. And look at that jawline.
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